Corn/beans above average
8/09/16 — As we drive further into August, we find a corn and soybean crop that is above average, but not significantly above average. Discussion of how good this 2016 crop is going to be has highlighted the past week, with many private estimates of the August crop report coming out. Some of those estimates are high, some low, but most expect crop sizes to be raised in this August report from the July numbers. Pro Ag expects that to be true as well, as our yield models indicate both corn and soybeans have slightly above average crops coming for now. The yield models have stabilized this week, with corn going a bit lower and soybeans a bit higher this week.
Crop progress reports Monday, Aug. 8, showed corn conditions declined 2% to 74% G/E, still above last year’s 70% rating. Pro Ag yield models showed the first decline in weeks of 0.7 bu/acre to 173.7 bu/acre. That might support the corn market a bit, especially if the declines continue for a few weeks. The crop is advanced, with 97% silking vs. 94% on average, and 53% in dough stage vs. 42% on average as the temperatures have been above normal the past few weeks, and we did have an early planted crop. Ironically, though, only 9% is dented vs. 12% normally (which is odd in an early maturing year).
Soybean conditions were unchanged at 72% G/E, and the yield model for soybeans expanded slightly to 47.30, up .12 bu/acre from last week. That should have applied some pressure to soybeans in trade this week, but the focus seems to be on weather forecasts for the next 2 weeks. Both soybean and corn crops are ahead of normal progress due to early planting and the warm temps this summer so far. Soybeans are 91% blooming vs. 88% normally, and 69% podding vs. 61% normally at this time. The yield estimate of 47.3 bu/acre is above trend yields of 45.85, so we do have an above average crop coming. But it apparently is not as good as some private estimates coming in as high as 47.7 bu/acre, vs. USDA’s July estimate of 46.7. A bushel hike would be a big hike for soybeans, and seems a bit of a stretch for an August report (especially with important August weather yet to be determined).
HRS wheat is 30% harvested, ahead of the 18% normally done at this time as the dry/warm temps are pushing harvest along rather quickly. HRS wheat conditions are steady at 68% G/E. The harvest is going great guns, with high quality as there have been few rain delays thus far. Yields are good, but not record large like the winter wheat crops were. Winter wheat is 94% harvested, vs. 91% normally so it is nearly completed. Barley is 32% harvested vs. 19% normally, and conditions are still at 72% rated G/E (up from 66% last year).
As we stated earlier, private forecasts for the USDA report this week indicate perhaps a bushel hike in soybean yields to 47.7 bu (which seems high to Pro Ag) and only 1-2 bu/acre hike in corn yields to near 170 bu/acre (which seems low to Pro Ag). If so, it might be a friendly report for soybeans, but bearish corn. Soybean yields are usually made in August, while corn is made in July so the next 3-5 weeks are still very important weather weeks for the soybean crop, and will still determine in the end how good this year’s soybean crop yields will be. So weather still is the most important item on the soybean markets agenda plate, at least for a few more weeks. Corn is becoming less important each week now as we close out the 2016 crop year there.
Weather forecasts look a bit wetter in the 7 day forecast, but still with some heat. The 8-14 day forecast looks drier, but cooler overall so it is really a mixed forecast.
Next support levels are $3.20 in Dec. corn and $9 in soybeans. We’ll have to make a decision whether to lift some hedges there or not if we get there as this is some major support for the grains. It would be odd to bottom the market in August, though, so if we get there in August it could indicate that prices might be going lower still (unless both corn and soybeans start to decline in yield potential like corn did this week).